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Does Your Business Need a Toll-Free 800 Number?
Should your business have a toll free number for customers to make sales, service and billing inquirers? The industry began in the early 1970’s and today most customers expect you to have it. Providing a toll free line can bring in a number of...
How To Make Money At Home Growing Small Landscape Plants On 1/20 Acre Or Less
Small town, big town, it doesn’t matter, if you have a small area in your backyard that you can use for planting, then you can make money growing small plants at home. Actually you can make pretty good money on 1/40 of one acre. That’s an area about...
Small Business Credit Cards For More Successful Businesses
Small business credit cards are credit instruments that cater
specifically to the needs of small businesses. They are like
your normal credit card except for some changes in interest
rates and features which are optimized for use by...
Small Business Q & A: Choosing A Business That's Right For You
Q: I really want to start my own business, but I have no idea what business would be best suited for me. I'm also eager to get started, but I don't want to pick the wrong business just because I'm impatient. How should I go about deciding what...
Triple Your Business In Three Ways
There really are only 3 marketing functions...once you master them, the rest of the game is pretty simple.
Every small business owner wants more business. So what do they do. They focus all of their marketing attention one thing -...
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How To Use Small Business Value As The Ultimate Performance Indicator
Business performance measurement and management promote the use of carefully selected key performance indicators to evaluate the performance of a company, its management and employees. Management theory has long recognized that the primary purpose of a company’s management is to maximize shareholder value. For large companies with stock that freely trades in public securities markets, this is a simple process of monitoring stock price. For small, private companies the situation is quite different.
Large, public companies have many stockholders that elect a board of directors, who in turn hire the key executives. This separation of ownership from management does not exist in small, private businesses. Often these three groups (owners, directors and management) are comprised of the exact same individuals. Small businesses become extensions of their owners in many ways including their objectives. Owners are typically more concerned about objectives like: minimizing taxes, maximizing personal income, maintaining personal lifestyles, minimizing the assets held within the business, and protecting personal assets. Pursuit of these objectives tends to minimize the value of small businesses. Owners often are not very interested in the value of their businesses until something happens that makes it important like a divorce or wanting to retire.
Do small business owners really not care about business value? Or is it because they are not accustomed to having it available? Business valuations cost thousands of dollars, so small businesses can’t afford to get one on a regular basis. If it is not practical to measure something, it becomes unimportant. If the value of small businesses were readily available, like public companies, then the owners would become interested in it. Quite possibly they might shift their business objectives to maximize value.
Those who have tried to monitor business value without paying for regular business valuations often used industry “rule of thumb” formulas. While formulas are easy to use they have some serious drawbacks. They are based on data of unknown quality and quantity. The formulas are expressed in ranges
that produce widely varying values. They do not take into consideration the unique facts and circumstances of each specific business.
There is a better solution. Much more information is now available about the sales of small, private businesses. There are a number of sources that have collected data on thousands of transactions over many years. These databases provide actual market data. Professionals and commonsense suggest that quality market data is the best source for appraising any property. The databases have some shortcomings, too. The information is limited to basic data like annual sales, asking price, cash flow, selling price, etc. And some types of businesses don’t have many transactions. The databases work best when there are many similar transactions, so common businesses like restaurants are good candidates. Averaged figures from many transactions offset any extreme or unusual cases. The ratio of selling price to annual sales, or selling price to cash flow is typically used to calculate a specific business’s value.
These databases are available by subscriptions that are not cheap. So it is not practical for a small business owner to access them directly. And the professionals who do subscribe aren’t prone to sharing them. There are a few companies that for a small fee will search the databases for transactions involving similar businesses, calculate the average ratios, and use them to calculate the value of a small business. These low cost business valuations based on actual market data are great tools for making business value readily available for most small businesses. Using this tool, small businesses can finally start using business value as the ultimate performance indicator, just like public companies.
About the Author
David E. Coffman is a Certified Public Accountant (CPA) who is Accredited in Business Valuation (ABV) and a Certified Valuation Analyst (CVA). His firm, Business Valuations & Strategies, offers a Thumbnail Business Appraisal for $99 that uses actual market data to calculate business value at http://www.business-valuation-for-99-bucks.com.
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| United States Small Business Administration |
| An electronic gateway of procurement information for and about small businesses. Search engine for contracting officers, marketing tool for small firms, ... |
| www.sba.gov |
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| SBA |
| The Small Business Planner includes information and resources that will help you at any stage of the business lifecycle. ... |
| www.sba.gov |
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| Main Page - SmallBusiness.com - Small Business Resources |
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| www.smallbusiness.com |
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| Yahoo! Small Business: Domain Names, Web Hosting, E-commerce ... |
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| Smallbusiness.gov.au redirect to business.gov.au |
| Business Entry Point - Helping small business in big ways. An Australian Government initiative. The content from this website has now been consolidated into ... |
| www.smallbusiness.gov.au |
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| Business & Small Business |
| Online and print small business publication. Information to help start, grow or manage a small business. |
| www.entrepreneur.com |
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| Microsoft Small Business Center |
| Your home for information about Microsoft's small-business products and services, tailored business advice, technology tools, and more. |
| www.microsoft.com |
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| The Small Business Advisor - advice for starting and operating a ... |
| Advice and assistance for starting and operating a small or home based business. |
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| SCORE "Counselors to America's Small Business" |
| A nonprofit association dedicated to encouraging the formation, growth, and success of small business nationwide through counseling and mentor programs. |
| www.score.org |
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| Small Business and Self-Employed One-Stop Resource |
| IR-2006-2, January 3, 2006 - Temporary and proposed regulations will significantly reduce tax filing burden for nearly 950000 small business owners. ... |
| www.irs.gov |
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| Welcome to Small Business BC your business resource in British ... |
| BC Business Services offers assistance and resources for those running or starting a business in British Columbia and Vancouver. |
| www.smallbusinessbc.ca |
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| Small Business Service | Home |
| Provides information and advice to help small businesses realise their potential. |
| www.sbs.gov.uk |
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| NSW Small Business |
| A site developed by the NSW Department of State and Regional Development for small businesses. Topics include management, resources, current issues and ... |
| www.smallbiz.nsw.gov.au |
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| Business Management & Advice: Small Business Resources & Information |
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| Small Business Lawyer, Attorney, Law, Legal Help - FindLaw for ... |
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| Small Business Funding Opportunities (SBIR and STTR) |
| Links to Small Business Funding Opportunities and SBIR / STTR Applications. |
| grants.nih.gov |
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| Microsoft bCentral Small Business Directory |
| Directory categorized by industry with company business card feature. |
| sbd.bcentral.com |
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| Our site has moved! Please update your bookmarks! |
| Facilitates the sharing and exchange of information among small business development centers, the small business administration and other business-oriented ... |
| sbdcnet.utsa.edu |
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| Small Business Development Corporation |
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